In December 2017, the goverment sold student loans with a face value of £3.5bn for £1.7bn.

As this amounted to a return of 48p in the £1, the PAC noted, it suggested this attempt to reduce public sector net debt by the Treasury was “short-sighted”.

“This sale has reduced public sector net debt by £1.7bn,” the report said. “However other measures demonstrate the sale worsens public finances.

“For example, the sale increases public sector net financial liabilities by £1.8bn, and the impact on the department’s accounts is similarly negative with the 2017–18 accounts recording a loss on the sale of £0.9 billion.”

It suggested “the government’s objective to reduce public sector net debt” ran the risk of “being prepared to sell at any price.”

“The Treasury’s focus on reducing its public sector net debt measure is a short-sighted approach which fails to convince us that the deal is the best one for public sector finances in the long term,” the PAC said.

The attempt to reduce the public sector net debt was “over-simplistic”, the committee said, and “sale options that may have achieved higher value for the taxpayer were disregarded”.

The government’s own analysis suggested that had it not sold the loans it would have recouped the £1.7bn in eight years and a further £1.6bn over the next 25 years, the report said.

Meg Hillier, chair of the PAC, said: “Government will need to learn quickly from the weaknesses of this sale if it is to secure the best deal for taxpayers in future.

“When public assets are gone, they’re gone – in the case of this first student loans sale, for too little return.”

The committee also raised concern around the transparency of the sale and suggested that in future the government should make it clearer who is investing in the loans and potentially profiting from public assets.

Just under 200 potential investors expressed an interest in the sale of the loans, of which 59 eventually invested. The bulk of the investors were pension funds and insurance companies, and others included banks, private wealth managers, alternative asset managers and hedge funds.

A Department for Education spokesperson said: “Student loans are designed so that borrowers only repay when they can afford to - this gives more people the chance to go to university and get on in life, but, as the Public Accounts Committee recognises in its report, this also means many students will never fully pay back their loans.

“We welcome the report from the committee and will issue a full response in due course.”